We need to go radical on economy - Zweli Mkhize

Johannesburg - If South Africa does not radicalise its economy soon, it will risk widening the gap of inequality, as well as putting the country's economy at risk, African National Congress treasurer general Zweli Mkhize said on Saturday.

Addressing members of the business sector during a Progressive Business Forum meeting, Mkhize said calling for a radical change was not an attack on the private sector.

"If we don't go radical… we are actually going to widen inequality so badly that our entire democracy will be at risk. And that is what we are solving; it has nothing to do with fighting with the private sector," he said.

SA needed to have an honest conversation about how it intended building a different economy than the one it had inherited in 1994, he added.

"It can't be built on the same basis that we inherited in 1994, it's got to change.

"If it does not change it means we actually short-changed our democracy, because our democracy has to be a platform for those who never had."

Economy

He added that business patterns on investment also needed to change.

"At the moment, the issue that is being raised is about how we are not investing in our own economy and how there's a lot of externalisation of the investment initiatives," Mkhize said.

The ANC will be taking a hard look at South Africa's economy as it debates radical economic transformation at its 5th National Policy Conference. The economy and the state of the party are at the centre of discussions.

Mkhize told business leaders that the ideas and suggestions that came out of their engagements with the party would go into new policy proposals that they would be putting to the gathering.

"We need to see all these matters that are being discussed and being processed within government. The ideas and the policies that we are going to be proposing from here; all of them coming back to filter into a conversation across the whole spectrum of South Africans, in particular in the private sector," he said.

Earlier, Trade and Industry Minister Rob Davies reiterated the need for the economy to undergo a radical change.

"We've got to have a radical approach to the economy. We can't carry on as we have been," Davies said.

He said there was a serious need for fundamental changes, specifically in the productive structure of the economy and its patterns of ownership, participation and management, which should be in favour of the majority of the country's population.

'Staring us in the face'

The patterns of inclusion also needed to undergo fundamental change in order to place the economy on a different kind of growth path, which could deliver higher levels of more inclusive economic growth, he said.

"If we don't do this, we're not going to be in a position to solve the problems of poverty, inequality and unemployment. That's what's staring us in the face."

Davies emphasised the need for South Africa's economy to move up in the value chain, by moving out of its position as an economy which was based on producing and exporting primary mineral commodities.

"That is what colonialism defined our role as.

"We need to break away from that because what happens is that those mineral commodities are used in somebody else's industrial processes and, if we look at the value chains, we will see that the smallest part of the final product, and actually a diminishing part of the final product, is made up of a raw material that goes in it.

"We've got to move up the value chain; we've got to move into more complex activities, value added activities, and that means that we've got to industrialise. That's what it's about."

He hoped the party would use its trade policies as tools to address the needs of industrial development.

The policy conference does not have constitutional powers to change policy, but proposals will be taken to the elective conference for adoption in December.

Gloomy news

But despite this, secretary general Gwede Mantashe has said the policy conference would implement immediate action where necessary.

Speaking to reporters on the eve of the conference, Mantashe said the country's current economic crisis would take centre stage, so that swift action could be taken to mitigate the damage.

He said subcommittee on economic transformation would discuss the economy throughout the six-day conference.

"It will deal with these issues for six days, because they are serious. We need to come out of here with more clarity," Mantashe said.

SA is in a technical recession: Its unemployment rate is at a 14-year high; it has suffered junk status downgrades by three ratings agencies and, on top of that, it faces potential interest rate and electricity price hikes.

This spell of gloomy news also follows growing tension between government and business after respected former finance minister Pravin Gordhan was given his marching orders by President Jacob Zuma.

Following a number of court cases, marches by members of the public, as well as the recent release of emails linking Zuma and other government officials to the controversial Gupta family, Mantashe said the issue of state capture would be discussed "candidly".